5 Unit MultiFamily Analysis - First Investment

[Michael Morton]

I'm looking at my first rental property.  This is in an working-class town 60 minutes west of Boston.  It's in good shape, doesn't need much work at all - maybe some minor stuff.  Long-term tenants occupy most units (10+ years!) so rents are on the low side by $100 / unit or so - but not much hassle from tenants

Price: $375,000 

5 Units.  Gross Monthly Income of $4100

2 Garages.  Gross Monthly Income of $1200

Expenses (Yearly):

Utilities: Gas ($800), Insurance ($3k), Elec ($3k), Water ($5k), Oil ($6k), Taxes ($5k)

Other: Vacancy ($1200 / 2%), CapEx ($3k), Snow/Lawn ($1800), Repairs ($2400), Garbage ($600), Management ($3500), P&I: $18k (30% Downpayment)

Yearly Income vs Expenses: $64k - 54k = $10k

Cash on Cash = 7.5% (10k on 120k)

My questions/comments are:

* Do those numbers look "reasonable" and am I missing anything big?  I've gone through the BP Analysis Tool.

* This seems OK, not great.  The big "killer" seems to be the utilities are very high.

* I'm interested in exploring splitting the utilities out to the tenants somehow.  It's an older multi-family so it's pretty complicated (I would think) to do that.  

* The ROI goes up quite a bit if I can raise the rents to be more inline with the area. $100 / unit x 5 units changes that to about 12% return.

* For what it's worth, the 50% rule shows $1500 / month cashflow, but actuals (above) show $800.  I think it's the expensive utilities.  Or maybe I'm overestimating the other costs.

Any feedback REALLY appreciated!

Thanks, Mike